It is expected that the Samsung Group will accelerate its ownership structure reform this year by tackling such issues as the ban on cross-shareholding and progress in banking-commerce separation.
Last year, Samsung Card sold all of its 5.0 percent shares in Cheil Industries to break the pivotal cross-shareholding structure of Cheil Industries, Samsung Life Insurance, Samsung Electronics, and Samsung Card that has stood for 16 years. In addition, the number of such structures was reduced from over 30 to 10. Industry insider consensus is that the group will focus on the vertical integration revolving around Samsung Electronics and Samsung Life Insurance and minimize the link between banking and non-banking subsidiaries prior to the handover.
It is expected that Samsung SDI will sell its 3.7 percent shares in Cheil Industries in the near future, and that Samsung C&T and Samsung Electro-Mechanics will sell theirs as well. Even in that case, the largest shareholders, including Samsung Electronics Vice Chairman Lee Jae-yong, can maintain majority shares and defend their rights. Still, the banking-commerce separation is a challenging task, because the 7.21 percent of Samsung Electronics shares owned by Samsung Life Insurance cannot be disposed of without an astronomical cost.
The Hanwha Group is busy reforming its own governance structure, too. It is predicted that Hanwha S&C, the group’s system integration provider fully owned by its third-generation owners and owning 100 percent of Hanwha Energy, will take a central role in the process. If Hanwha S&C is consolidated with the holding company of the group, the three young owners can become the largest shareholders of the holding company to have a greater influence in the entire group.
In the Hyundai Motor Group, the subsidiaries are connected to the cross-shareholding structure of Hyundai Motor Company, Kia Motors and Hyundai Mobis. Chairman Chung Mong-koo controls the group by representing 5.17 percent of Hyundai Motor Company and 6.96 percent of Hyundai Mobis. Securities analysts are predicting that Hyundai Mobis and Kia Motors will be spun off, and then an integrated holding company will be set up through a merger between ir respective holding companies.
Lotte Group Chairman Shin Dong-bin is at the center of the handover of the Lotte Group. Vice Chairman Shin Dong-joo appears to have been replaced in Lotte Japan. Significant and frequent equity ownership changes are likely to occur during the disassembly of the 40 or so cross-shareholding structures prior to the establishment of a holding company.